MicroStrategy (MSTR) shares plunge after Citron Research takes a new bet against the stock

MSTR) shares plummeted more than 16% after short seller Citron Research said it had taken a new bet against the stock, which has gained over 500% this year.

Shares of MicroStrategy (MSTR) fell sharply in premarket trading Thursday after short seller Citron Research disclosed it had taken a new bet against the stock, which has gained over 500% this year.

The software company's stock dropped more than 16% after Citron highlighted the company's recent bitcoin purchases and gains, relative to the broader cryptocurrency market.

MicroStrategy shares hit a fresh record of $98,000 Thursday.

The company disclosed earlier this week it purchased another 51,780 bitcoins for approximately $4.6 billion in cash at an average price of just over $88,500 per bitcoin. The company has acquired a total of 331,200 bitcoins for $16.5 billion, spending an average of 49,874 per bitcoin.

In a post on Substack early Thursday, Citron Research said that while the firm remains bullish on bitcoin — and was bullish on MicroStrategy's bitcoin play years ago — the move in MicroStrategy stock has "completely detached from BTC fundamentals."

"We are now officially bullish on MicroStrategy stock and are initiating a new short position in the company's shares," the firm added. "This is not a commentary on bitcoin, which we remain bullish on, but rather a commentary on the company's stock, which we believe is a screaming sell at these nosebleed levels."

Bitcoin hit a fresh record high of $69,000 Thursday, notching a gain of over 100% this year and continuing its record-breaking rally. The cryptocurrency hit an all-time high of nearly $70,000 in November before pulling back sharply.

MicroStrategy began investing in bitcoin in 2020 with what now seems like a measly $250 million investment. Since then, the company has disclosed over $4 billion in bitcoin purchases, spending an average of $49,874 per bitcoin.

Shares of MicroStrategy have soared over 500% this year, fueled by the company's bitcoin purchases and gains. The stock has been a favorite of retail traders and is frequently discussed on social media platforms.

Shares of other companies, like cryptocurrency exchange Coinbase (COIN) and Robinhood (HOOD), have been on an upward trajectory since Trump’s victory as part of the so-called Trump trade.

Trump has made several promises to the industry, including the appointment of a crypto Presidential Advisory Council, firing SEC Chair Gary Gensler, and creating a "strategic national bitcoin stockpile." In July, Trump also attended a bitcoin conference in Nashville in a signal of his friendliness to the sector.

Laura Bratton is a reporter for Yahoo Finance. Follow her on Twitter @LauraBratton5.

Josh Schafer contributed reporting.

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